- Manufacturing sector still struggling for survival —Analysts
- Govt policies impacted negatively on growth — Shareholder
Despite the dwindling activities at the nation’s capital market and the exodus of portfolio investors due to macroeconomic challenges, nine quoted companies on the Nigerian Stock Exchange reported N374.956billion revenue increase in the third quarter of 2018.
The companies are: Dangote Cement Plc, Oando Plc, Total Nigeria Plc, Nestle Nigeria Plc, Seplat Petroleum Plc, 11 (Mobil) Plc, Julius Berger Nigeria Plc, Unilever Nigeria Plc and Cadbury Nigeria Plc.
Sectorial analysis
A breakdown of the company’s performance showed that Dangote Cement reported an increase of 13.5 per cent, to N685.290billion, in the nine months ended September 2018, against N603.575billion in 2017. Oando followed with a 31.8 per cent increase to N505.0851billion, from N383.350 billion recorded in the comparable period of 2017.
Total Nigeria came close with 2.58 per cent increase in revenue to N226.914billion, against the N221.198billion reported last year. Similarly, Nestle Nigeria Plc’s revenue increased by 9.7 per cent to N203.134billion in the third quarter of 2018, from N185.242billion in 2017.
Seplat petroleum also recorded 103.9 per cent increase, from N85.190billion last year to N173.710billion. Others are: (Mobil) Plc which recorded an increase of 41.7 per cent to N125.042billion at the end of the nine months ended September 2018, from N88.246billion last year.
Julius Berger, Unilever and Cadbury Nigeria Plc, reported N118.472billion, from N105.485billion; N72.305billion, from N65.302billion; and N26.959billion, from N24.365billion respectively.
Analysts’ position
Market commentators who spoke with our correspondent revealed that, although the growth in some sectors was largely due to the surge in the price of crude oil, other sectors like the banks and some manufacturing sectors were still struggling for survival.
A professor of Economics, Benjamin Martins, said in general terms, the companies did not perform to expectation. This is because the main driver of economic growth has suffered tremendous neglect since the advent of the President Muhammadu Buhari administration.
“Apart from the administration’s obvious sidetracking of the business community in economic and business matters, many of its policies have also impacted negatively on the sectors,” he said.
The Director-General, Lagos Chambers of Commerce and Industry, Dr. Muda Yusuf, blamed some of the problems the nation is going through on the current administration’s slow start in building the economy.
According to Yusuf, absence of an economic blueprint was one of the concerns of the private sector in the early days of the administration.
He added that the late formation of a cabinet as well as the peculiar late passage of budgets on the part of government also hindered economic growth.
Yusuf said that the manufacturing sector experienced some major challenges during the last three years of the current administration.
He said, “The factors were both external and domestic. The main external factor was the collapse of oil price, which affected forex availability and triggered sharp exchange rate depreciation. There was very little the government could do to stem that.
“However, the policy component of the problem resulted largely from lack of support, foreign exchange policy choices which aggravated the problem of forex liquidity. The restriction of 41 items from access to interbank forex market added to the plight of some manufacturing firms.
“The high interest rate and unfair competition from imported products were also factors that constrained the growth of the industrial sector. High energy cost continued to impede the competitiveness of the sector. Capacity utilisation was between 40 – 45 per cent over these periods.”
Not yet uhuru—Shareholder
National Chairman, Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie, said even though some of the companies were churning out impressive results, it is not yet Uhuru. But the good news is that segments of the manufacturing sector that had substantial backward integration capabilities had a very good leverage during the review period.
He said, “Such firms became more competitive, sustainable and profitable. They are largely in the food and beverage categories. The agriculture sector, however, gained government support especially in funding for rice farming and processing.
“The pace of mechanisation, which can only be handled by the private sector, is still low, which was why food prices remain an issue in the country. It is only mechanised agriculture that will guarantee food security in a country with a population of over
180 million.”
Nigeria downgraded
Meanwhile, the World Bank, in its latest Ease of Doing Business ranking, said Nigeria’s ranking had dropped. The report, themed, “Doing Business 2019: A year of record reforms, Rising” saw Nigeria slide to 146 from 145 last year, a position now taken by another West African country, Mali.
According to World Bank, in the 2017 edition, Nigeria moved 24 places from its 2016 spot of 169 to 145.
“Governments have the enormous task of fostering an environment where entrepreneurs and small and medium enterprises can thrive,” said Jim Yong Kim, World Bank Group
President.
“Sound and efficient business regulations are critical for entrepreneurship and a thriving private sector. Without them, we have no chance to end extreme poverty and boost shared prosperity around the world,” he said.